By Monica Langley
Twitter Inc. is expected to field bids this week, and Marc
Benioff has been building a case to Salesforce.com Inc. investors
and others that his company should be the buyer, according to
people familiar with the matter.
Mr. Benioff is looking to make a splashy acquisition that would
secure for Salesforce a treasure trove of data as well as a prized
consumer brand, according to the people.
Mr. Benioff, whose recent approach to Twitter set off the
bidding process, sees the social-media pioneer as an "unpolished
jewel" with untapped potential in advertising, e-commerce and other
data-rich applications he regards as important to the
cloud-software juggernaut's next phase of growth, the people
said.
But the brash CEO, who lost out to Microsoft Corp. in a bitter
battle to buy LinkedIn Corp. this spring , faces formidable
obstacles. Alphabet Inc.'s Google may bid also, the people said,
while media giant Walt Disney Co. has been considering its own
offer.
While Twitter could cost upward of $20 billion, or more than a
third of Salesforce's roughly $49 billion market value, it would be
more bite-sized for Google, the search powerhouse whose parent
sports a market value of more than $500 billion. Disney, meanwhile,
has a market capitalization of almost $150 billion.
There is no guarantee any bid will come in high enough to entice
Twitter to sell, and the company could remain independent.
Salesforce investors so far have been cool to the prospect of a
deal with Twitter, which is beset with challenges. Owning it would
also vault Salesforce outside its comfort zone as a provider of
cloud-based services for businesses, which helped pioneer the
concept of selling software as a service over the internet.
But Mr. Benioff clearly has a gleam in his eye for Twitter,
which generates untold reams of data from its hundreds of millions
of users and offers potential as a tantalizing turnaround
opportunity.
"Data is the currency in software's new world order," he said in
an interview this past weekend, though he wasn't specifically
speaking about Twitter. "I'm looking hard at unique data-rich
companies and what I can do to make them more powerful and
innovative if combined with Salesforce."
At a private dinner recently, Mr. Benioff told a dozen tech CEOs
that Twitter is an "unpolished jewel," according to a person who
attended. "Twitter is a great brand," he told the CEOs, and he
wants to "make it a great company," according to the person.
Like LinkedIn, Twitter could bring Salesforce reams of data to
create recommendations and insights for its corporate
customers.
Twitter could complement Mr. Benioff's goal of harnessing more
data for artificial-intelligence-driven analysis, as well as allow
Salesforce to offer additional services in sales, marketing and
e-commerce for the company's 150,000 customers.
Both Salesforce and its CEO already have ties to Twitter. Mr.
Benioff and Twitter Chief Executive Jack Dorsey live in the same
San Francisco neighborhood. Salesforce already incorporates Twitter
in numerous cloud services for its corporate customers, from
service complaints handled through tweets to analysis of tweets on
products.
The exuberant Mr. Benioff, who became a billionaire as
Salesforce's stock rose ninefold in the past decade, sees numerous
benefits from bringing the companies more closely together.
According to a person familiar with his thinking, Mr. Benioff is
convinced a strong partner could figure out how to better monetize
Twitter's big user base and fire hose of content, something the
social-media company has struggled with.
At first blush, Twitter, a strong consumer brand, seems an
unlikely fit for the corporate-focused Salesforce. In acquiring
Twitter, Salesforce would take on a host of problems that have
dogged the social-media company, including its struggles to
reinvigorate user growth and combat some of its users' abusive
behavior.
Twitter would also be a much bigger acquisition than Mr. Benioff
has ever done before.
Mr. Benioff's M&A focus is "the single biggest overhang" on
Salesforce stock, UBS Group AG software analyst Brent Thill said.
After Salesforce failed to meet its billings forecast and revenue
guidance in its most recent quarter, some investors worry about the
health of its core business and want the company to focus on
that.
Yet, "if Marc goes this big, the market might ultimately give
him a pass because he changed the industry," Mr. Thill said. "Marc
has shown vision and backed it up with financial proof. Now he may
tell investors that in return for short-term pain, prepare for
long-term gain."
Indeed, Mr. Benioff said in the interview that he would assure
investors at the company's Dreamforce customer conference in San
Francisco Wednesday that, regardless of whether it makes a big
purchase, Salesforce will continue to deliver "excellent operating
results." He added: "In reality, we've not altered our mindful
approach to acquisitions."
Salesforce has made a number of purchases lately. In July, it
bought e-commerce specialist Demandware Inc. for $2.8 billion,
Salesforce's largest takeover to date. This week, it agreed to buy
San Francisco startup Krux for about $700 million in a bid to
bolster the artificial-intelligence capacity in Salesforce's
marketing cloud.
Mr. Benioff said he is spending about 25% of his time on M&A
this year.
In addition to the bid for Twitter and the Krux deal, Salesforce
is appealing to U.S. and European regulators to scuttle or revise
Microsoft's $26 billion planned acquisition of LinkedIn, another
deep well of valuable data. He has complained about the LinkedIn
sales process.
Mr. Benioff said his goal was to get Microsoft to open up
LinkedIn's huge repository of individual and company profiles,
rather than allow the software giant to wield it as competitive
advantage against Salesforce and other enterprise-software
companies.
Write to Monica Langley at monica.langley@wsj.com
(END) Dow Jones Newswires
October 05, 2016 02:47 ET (06:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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